Photo by jarmoluk
Our emotions play a big role in our money habits and behaviours. And, as a recent study led by financial psychologist Dr. Brad Klontz suggests, so can our memories.
In a recent study, Dr. Klontz and his colleagues at Creighton University explored the relationship between happy memories, keepsakes, and financial decisions. They split subjects into two groups: a control group and an experimental group. They instructed the experimental group to bring a "nostalgic item or a picture of a nostalgic item" to the study.
During the study, the control group watched a presentation focused on the importance of saving along with different methods for doing so. The experimental group did not see this presentation. Over at Psychology Today, Dr. Klontz explains how the experiment worked for this group instead:
"Instead, they experienced a presentation that focused on immersive, emotion-based exercises designed to evoke positive memories and feelings around their nostalgic items. With these positive emotions evoked, the presentation shifted to naming these emotions and the underlying values associated with their nostalgic items and how these values and emotions relate to future savings goals."
In other words, researchers evoked positive emotions in the experimental group in relation to saving while the control group just received some standard financial literacy advice. For the next few weeks, the researchers studied the savings habits of both groups. The results?
"While the control group increased their savings by 22 per cent, the experimental group increased their savings by a whopping 67 per cent -- an increase three times greater."
It just goes to show that personal finance is more emotional than mathematical. You can learn the basics of Money 101 all day long, but ultimately, it comes down to the touchy-feely stuff. As Klontz concluded, "We must engage our emotional brain if we want to change our financial behaviours."
Based on the results of his study, he suggests a few exercises to help you build better money habits. For example:
Think of an item you've kept for positive sentimental reasons. Hold it in your hands. Think about the circumstances by which this item came into your possession and what it means to you. Is it something a grandparent or parent gave you and thus is tied to the importance of a loving and supportive family? Is it an item from your childhood that you relate to feelings of safety and security? Or is it something from a vacation abroad that serves as a reminder of a sense of adventure and the great experiences you were lucky to have and that you hope to have more of in the future?
From there, explore the values and feelings you've associated with that keepsake. As Klontz points out, there's a good chance your answers will reveal the priorities that matter to you most. You can then use your savings goals to support these priorities. He also suggests visualising your goal by actually giving your savings account a name -- this is a tip we've suggested before, too.
For more tips and more on the study, head to Klontz's full article here.